10-K 1 mye-20131231x10k.htm 10-K MYE-2013.12.31-10K
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 2013
COMMISSION FILE NUMBER 001-08524
MYERS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
OHIO
34-0778636
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification Number)
 
1293 S. MAIN STREET, AKRON, OHIO
44301
(330) 253-5592
(Address of Principal Executive Offices)
(Zip Code)
(Telephone Number)
 
Securities Registered Pursuant to
Section 12(b) of the Act:
Name of Each Exchange
On which registered:
Common Stock, Without Par Value
New York Stock Exchange
(Title of Class)
 
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  ¬
Accelerated filer  x
Non-accelerated filer  ¬
Smaller reporting company  ¬
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing sale price on the New York Stock Exchange as of June 30, 2013: $472,251,735
Indicate the number of shares outstanding of registrant’s common stock as of February 28, 2014: 33,424,302 Shares of Common Stock, without par value.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant’s Definitive Proxy Statement for its 2014 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K.
 



TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 21
 
 
Exhibit 23
 
 
Exhibit 31(a)
 
 
Exhibit 31(b)
 
 
Exhibit 32
 



PART I
 
ITEM 1.     Business

(a)
General Development of Business
Myers Industries, Inc. (the “Company”) was founded in Akron, Ohio, in 1933. The terms “Myers Industries,” “Company” “we,” “us,” or “our” wherever used herein refer to the Company, unless the context indicates to the contrary. Since then, the Company has grown from a small storefront distributing tire service supplies into an international manufacturing and distribution enterprise. In 1971, the Company went public, and the stock is traded on the New York Stock Exchange under the ticker symbol MYE.
Headquartered in Akron, Ohio, the Company manufactures a diverse range of polymer products for industrial, agricultural, automotive, commercial and consumer markets. Myers Industries is a leader in the manufacturing of plastic reusable material handling containers and pallets, and is North America’s leading producer of plastic horticultural pots, trays and flower planters. Other principal product lines include plastic storage and organization containers, plastic OEM parts, rubber tire repair products and custom plastic and rubber products.
The Company is also the largest wholesale distributor of tools, equipment and supplies for the tire, wheel and undervehicle service industry in the United States. The distribution products range from tire balancers and alignment systems to valve caps, tire repair tools and other consumable service supplies.
As of December 31, 2013, the Company operated 24 manufacturing facilities, 19 sales offices, four distribution centers and six distribution branches located throughout North, Central and South America; had approximately 13,000 manufactured products and over 10,000 distributed products; and had approximately 3,400 employees.
Serving customers around the world, products and related services from Myers Industries’ brands provide a wide range of performance benefits to customers in diverse niche markets. Some of these benefits include increasing productivity, driving green initiatives, lowering material handling costs, improving product quality, reducing labor costs, shortening assembly times, eliminating solid waste and increasing profitability.
The Company’s business strategy is focused on sustainable, profitable growth guided by five key operating principles: 1) Customer Dedication, 2) Innovation, 3) Operations Excellence, 4) Organization Development, and 5) Financial Strength. Applying these principles to our business, the Company emphasizes:
Industry-leading innovation of niche, high margin products;
Being the low-cost provider of certain commodity products where our brands excel;
Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service;
Operations excellence initiatives to reduce costs and improve productivity within our manufacturing and distribution footprint;
Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns;
Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments;
Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organization development; and
Selective acquisitions as opportunities arise to enhance our leadership in key markets and add to shareholder value.
The Company continually reviews its segments and brands for strategic fit and growth potential. The review process is dedicated to furthering innovation and brand leadership in our markets, building strong customer relationships and positioning the Company for strong financial performance.
 
(b)
Financial Information About Segments
The response to this section of Item 1 is contained in the Industry Segments footnote of the Notes to Consolidated Financial Statements under Item 8 of this report.

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(c)
Description of Business
The Company conducts its business activities in four distinct business segments, including three in manufacturing and one in distribution. The manufacturing segments consist of: Material Handling, Lawn and Garden, and Engineered Products.
In our manufacturing segments, we design, manufacture, and market a variety of plastic and rubber products. These range from plastic reusable material handling containers and small parts storage bins to plastic horticultural pots and hanging baskets, decorative resin planters, plastic OEM parts, tire repair materials and custom plastic and rubber products.
The Distribution Segment is engaged in the distribution of tools, equipment and supplies used for tire, wheel and undervehicle service on passenger, heavy truck and off-road vehicles.

Information regarding the revenues of each segment is contained in the Industry Segments footnote of the Notes to the Consolidated Financial Statements under Item 8 of this report.













































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The following table summarizes the key attributes of our business segments for the year ended December 31, 2013:
Continuing
Operations
 
Material Handling
Segment
 
Lawn and Garden
Segment
 
Distribution
Segment
 
Engineered Products
Segment
Net Sales (in millions)
 
$323
 
$205
 
$177
 
$138
% of Total Net Sales
 
39%
 
25%
 
21%
 
15%
 
 
 
 
 
 
 
 
 
Key Product Areas
 
•      Plastic Reusable Containers & Pallets
•      Plastic Storage & Organization Products
•      Plastic Carts
•      Metal Carts
•      Wooden Dollies
•      Custom Products
 
•      Plastic Horticultural Pots, Trays, Flats & Hanging Baskets
•      Decorative Resin Planters
•      Custom Products
 
•      Tire Valves & Accessories
•      Tire Changing & Balancing Equipment
•      Lifts & Alignment Equipment
•      Service Equipment
•      Hand Tools
•      Tire Repair & Retread Equipment & Supplies
•      Brake, Transmission & Allied Service Equipment & Supplies
 
•      Rubber & Plastic Original Equipment Replacement Parts
•      Tire Repair & Retreading Products
•      Highway Markings
•      Industrial Rubber
•      Custom Rubber & Plastic Products
 
 
 
 
 
 
 
 
 
Product Brands
 
•      Akro-Mils
•      Jamco Products •      Buckhorn®
•      Novel do Nordeste S.A. •      Myers do Brasil
 
•      Dillen®
•      ITML
•      Listo™
•      Pro Cal
•      Planters’ Pride®
•      Akro-Mils Lawn & Garden
 
•      Myers Tire Supply®
•      Myers Tire Supply International
 
•      Ameri-Kart®
•      Patch Rubber Company®
•      WEK
 
 
 
 
 
 
 
 
 
Key Capabilities & Services
 
•      Product Design
•      Prototyping
•      Product Testing
•      Material Formulation
•      Injection Molding
•      Structural Foam Molding
•      Metal Forming • Stainless Steel Forming
•      Wood Fabrication
•      Powder Coating
•      Material Regrind & Recycling
 
•      Product Design
•      Prototyping
•      Testing
•      Material Formulation
•      Injection Molding
•      Thermoforming
•      Co-Extrusion Thermoforming
•      Custom Printing & Labeling
•      Material Regrind & Recycling
 
•      Broad Sales Coverage
•      Local Sales
•      Four strategically placed distribution centers
•      International Distribution
•      Personalized Service
•      National Accounts
•      Product Training
•      Repair/Service Training
•      New Products/Services “Speed to Market”
 
•      Rubber Mixing
•      Rubber Compounding
•      Rubber Calendering
•      Rubber Extrusion
•      Plastic Blow Molding
•      Plastic Rotational Molding
•      Thermoforming
 
 
 
 
 
 
 
 
 
Representative Markets
 
•      Agriculture
•      Automotive
•      Commercial
•      Food Processing
•      Food Distribution
•      Healthcare
•      Industrial
•      Manufacturing
•      Retail Distribution
•      Consumer
 
•      Horticulture:
- Growers
- Nurseries
- Greenhouses
- Retail Garden Centers
•      Consumer
- Retail Garden Centers
- Retail Home Centers
 
•      Retail Tire Dealers
•      Truck Tire Dealers
•      Auto Dealers
•      Commercial Auto & Truck Fleets
•      General Repair & Services Facilities
•      Tire Retreaders
•      Governmental Agencies
 
•      Automotive OEM
•      Industrial
•      Mining
•      Recreational Marine
•      Recreational Vehicle
•      Road Construction
•      Sporting Goods
•      Tire Repair
•      Telecommunications

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Manufacturing Segments Overview
Material Handling Segment
The Material Handling Segment is comprised of plastic reusable material handling containers, pallets and bins, as well as metal shelving, cabinet and racking systems. The major brands in this segment which includes Buckhorn®, Akro-Mils, Novel® and Jamco Products, have strong leadership positions across markets such as automotive, appliance, general industrial/manufacturing, retail distribution, agriculture, and food processing. This leadership position is built through constant innovation, diverse manufacturing processes, consistent quality and superior customer service resulting in significant productivity and cost-saving benefits for our customers.
Buckhorn’s reusable containers and pallets are used in closed-loop supply chains to help customers reduce material handling costs by replacing single-use cardboard boxes, easily damaged wooden pallets and high-cost steel containers. Cost-reduction benefits include: improving product protection, increasing handling efficiencies, reducing freight costs and eliminating solid waste and disposal costs. Small parts bins, storage systems and transport products from Akro-Mils provide similar benefits by creating storage and organization efficiency throughout our end users’ operations.
Buckhorn offers a product selection rich in both breadth and depth, as well as a direct sales force with the packaging and material handling expertise that makes Buckhorn a key solutions partner for our customers. Buckhorn’s product line spans injection-molded hand-held containers and totes; injection and structural foam-molded bulk transport containers in both collapsible and fixed-wall styles; and injection and structural foam pallets. Buckhorn also produces custom material handling packaging. Customers rely on Buckhorn’s single-source efficiency and the productivity and profitability benefits delivered through value-added innovation, broad product selection, quality and packaging conversion services.
Buckhorn hand-held containers include attached lid, detached lid, bi-color and specialty styles that stack and/or nest for efficient space usage, thus lowering freight and storage costs. In manufacturing plants across North America, our container and pallet systems are reused hundreds of times to ship products such as small fasteners or large components from suppliers directly to assembly areas—protecting parts throughout the supply chain and reducing scrap rates. Our attached lid containers and pallets are used in retail distribution centers to organize inventory, sort orders and then transport products directly to stores. In the food processing and distribution industry, our specialty containers provide superior protection to food products while in transit and are more sanitary than cardboard boxes.
Buckhorn’s selection of collapsible and fixed-wall bulk transport containers leads the North American material handling industry. Bulk containers perform both light and heavy-duty tasks, whether distributing seed products, carrying large automotive components or shipping liquids across long distances. These containers range in size from footprints of 32” x 30” to 70” x 48”; heights up to 65”; and weight capacities up to 3,000 lbs. Bulk containers are compatible with forklifts for easy handling. Many of the containers collapse to a third of their size for space-saving stacking, storage and return transport, thus helping to reduce freight and storage costs.
Examples of bulk container applications include our Center Flow Container, which is used by leading seed distributors to efficiently transport and dispense up to 2,500 lbs. of their products. The unique Center Flow Container can be emptied in approximately 30 seconds, then broken down for return shipping and refilling, thus eliminating waste created by traditional seed bags. Manufacturers of tomato paste employ our Caliber® and Citadel® bulk containers to move processed tomato products across the country in railcars. The smooth-sided, impact-resistant containers replace wooden crates and steel containers that can cause product damage and contamination. Citadel containers can carry up to 3,000 lbs. /300 gallons of liquefied product, safely stack when fully loaded and are designed for long-term indoor or outdoor storage of loads. This product line is applicable to other food processing and ingredient niches such as concentrates, oils, syrups and similar products.
Buckhorn also manufactures collapsible containers featuring an integrated pallet and lid system. Maximizer® is a unique alternative for corrugated bulk container users. Unlike short-lived corrugated containers that are awkward to assemble and knock down, Maximizer is easily constructed by one person and can be reused hundreds of times. The walls easily assemble and collapse, while the integrated locking system provides strength and stability in transport. It is made from durable, moisture-resistant plastic and can be stored indoors or outdoors. The container is an ideal solution for shipping and storing light-duty dry goods and maximizes productivity, cost savings, safety, space usage and sustainability.
Buckhorn’s innovation in bulk containers also focuses on specific niche markets where the Company’s expertise can bring significant value in a closed loop supply chain. For example, in 2011 Buckhorn acquired tooling assets and intellectual property for a new reusable plastic container used in producing, shipping, storing and processing bulk natural cheese. The “640 Cheese Box” is a natural extension to Buckhorn’s bulk container product line, offering many benefits over the industry’s traditional wood boxes by providing end users with less waste and faster cycle times. It is compatible with cheese industry manufacturing processes including dolly and forklift transport, automation, vacuum chambers, inverters, packaging and weighing. The 640 Cheesebox has a 24” x 30” x 37” footprint and a 710-lb. fill capacity. It reduces waste and improves sanitation and quality by replacing wood

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boxes, which can splinter and contaminate cheese during the material handling process. USDA approved, the container allows for faster cool down to 40 degrees within seven days, thereby minimizing cold storage requirements and producing more consistent cheese from the core to the outside surface.
Buckhorn’s plastic pallets interwork with the hand-held containers and totes to create a completely reusable system and provide efficient space utilization in plants, warehouses and truck trailers — helping customers to reduce storage and freight costs. Buckhorn also produces a wide range of specialty pallets for niche-type shipping applications, such as drum pallets for chemical and liquid transport.
Novel is Brazil's leading designer and manufacturer of reusable plastic crates and totes used for closed-loop shipping and storage in the region's fast-growing food and agriculture industries. Novel's product line is primarily focused on injection-molded containers but also produces a diverse range of plastic industrial safety products.  With strong relationships to major international companies in its markets, Novel complements Myers Industries' material handling business in Brazil and aligns with the Company's material handling and geographic growth strategy.
Akro-Mils provides customers with virtually “everything needed to store, organize and transport for greater productivity and profitability.” These material handling products serve industrial and commercial end-users through leading industrial supply catalogers and material handling distributors. Products range from AkroBins® — the industry’s leading small parts bins — to Super-Size AkroBins, metal panel and bin hanging systems, metal storage cabinet and bin systems, wire shelving systems, plastic and metal transport carts and a wide variety of custom storage and transport products. Capabilities used throughout the Akro-Mils product line include: injection molding, metal forming, powder-coat painting/metal finishing and wood fabrication.
Akro-Mils products deliver storage and organization solutions in a wide variety of applications, from creating assembly line workstations to organizing medical supplies and retail displays. Emphasis is placed on product bundling and customizing systems to create specific storage and organization configurations for customers’ operations. For example, industrial manufacturers with specialized tool and parts storage areas — known as “tool cribs” — use a combination of Akro-Mils bins, racking, locking cabinets, work tables and transport carts to speed assembly times, maintain accurate inventories and reduce loss. Metal carts and dollies are paired with custom-made containers to create unique transport systems capable of handling parts and components both small and large. Our powder coating/painting capability allows for high-quality, scratch-resistant finishing of metal products in a multitude of colors and finish styles.
Cross-marketing and cross-selling are key synergies between the Material Handling Segment brands. Equally important are cross-manufacturing capabilities that allow each brand to offer customers a wider range of value-added design and molding benefits. In addition to standard material handling products, we utilize the extensive design and manufacturing capabilities between Buckhorn and Akro-Mils for turnkey production of custom material handling products.
With the resulting benefits of reducing packaging costs, improving safety and quality, simplifying workflows and eliminating waste, Akro-Mils products provide the perfect solution for workplace efficiency programs, such as 5S Lean. In support of such programs, Akro-Mils has several product lines, including the clear Insight® Bin for the healthcare industry and the unique, bi-colored Indicator® Bin, which provides a visual cue to refill bins for efficient assembly line, supply room or distribution center work. As a result of new product development and listening to the “voice of the customer” to provide solutions, the Akro-Mils brand is recognized throughout the material handling industry for continuous innovation, high quality and reliable service.
Jamco Products is well established in industrial and commercial markets with its wide selection of welded steel service carts, platform trucks, mobile work centers, racks and cabinets for plastic bins, safety flammable cabinets, medical cylinder carts and more. Jamco Product's strong product offering, relationships with industrial distributors and reputation for quality and service complements Myers Industries' existing Akro-Mils business and aligns with the Company's material handling growth strategy.
All of our Material Handling Segment products are designed to reduce the waste produced by cardboard boxes and wooden pallets in supply chains. In our own manufacturing and product innovation, we continue to seek eco-friendly alternatives for our own plastic products. For example, our Akro-Mils EarthSaver® AkroBins and Shelf Bins are produced from 100 percent recycled plastics. Available in earth tone colors of terra cotta, hunter green and sandstone, the EarthSaver Series offers users an eco-friendly choice in plastic storage and organization products, while boosting productivity in the workplace and helping companies make a positive impact on the environment. In addition, our Buckhorn business utilized more than 24 million lbs. of recycled or reprocessed plastics in its manufacturing processes last year. This accounted for approximately 23 percent of Buckhorn’s total material usage, applied to products ranging from hand-held totes to bulk containers.
Sustainable, profitable growth in this segment is fueled by: a strong focus on innovation with value-added new products; concentrating sales efforts on niche markets and applications; increasing awareness of plastic reusable material handling products to drive conversions from cardboard and wood products; and managing the balance of product pricing and raw material costs. The

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potential for strategic, bolt-on acquisitions also provides opportunities to expand the scope of our brand leadership and the range of value-added products and services that we bring to customers.
Lawn and Garden Segment
The Company’s Lawn and Garden Segment includes the Dillen®, ITML, Pro Cal, Listo, Planters’ Pride® and Akro-Mils Lawn & Garden brands, which encompass the variety of plant containers that growers and retailers need to serve the North American horticulture market. Through direct sales and distribution channels, we serve customers ranging from professional growers with greenhouse facilities or outdoor nurseries to independent garden centers and retail home centers.
For growers, our Dillen, ITML, and Pro Cal products create dense growing environments, increase efficiency and reduce costs in their operations. Our extensive product range includes injection-molded and thermoformed pots, hanging baskets, flats and carry trays, plug trays, nursery containers, propagation sheets, and specialty pots. Ever-changing consumer trends have driven demand for a variety of decorative containers that capture the consumers’ attention at retail without hampering the operational efficiencies throughout the growing process. Our product innovation efforts are focused on increasing the output of designs to serve this market by expanding our manufacturing capabilities to cost-effectively produce these decorative products in North America.
In addition to working with growers on product innovation, we support their increasing needs for branding and retail merchandising programs with services such as multi-color offset printing and adhesive labeling. We have expanded our print capabilities to offer our customers two levels of quality for printed pots, our GreenStar option for basic brand identification, and a premium, SilverStar print package for more elaborate pot graphics. Once filled with plant material by the grower and shipped to retail, these customized pots serve as packaging for plants and create vibrant point-of-sale materials.
For retailers, our Listo brand encompasses decorative resin planters that feature intricate molding details and unique finishes in ceramic, metallic, weathered stone and natural textured styles. The upscale look of these decorative planters captures the retailer’s attention and the consumer’s imagination. Products include a diverse offering of planters, bowls and accent pieces for indoor and outdoor container gardening. Consistent new product development is key to our success in the retail garden center, ecommerce, food and drug and mass merchandiser channels. Proprietary molding and finishing processes, along with creative designs, deliver the unique look in the decorative resin planter category that sets our products apart from the competition in leading retail stores across North America.
In addition to Listo, two other brands in the retail channel of the Lawn and Garden Segment include Planters’ Pride and Akro-Mils Lawn & Garden products. Planters’ Pride has a diverse product offering dedicated to the at-home gardener. Featured products include a wide range of Fiber Grow® seed starting kits with 100 percent, USDA Certified peat-free renewable coconut coir (coconut husk) pellets and pots that outperform the competing offerings. In addition, our exclusive offerings of gel2root™ rooting gel, coconut coir soils, coconut coir mulches and other great gardening accessories are all backed by customizable retail displays.
Akro-Mils Lawn & Garden provides a wide range of high quality planters, innovative vertical gardens, dependable hanging baskets, as well as ergonomic watering cans and other related items for the home gardener. With sizes ranging from three ounces to one thousand gallons, and more than eight different materials available, the Akro-Mils Lawn and Garden line is sure to carry the solution for every customer. For example, the use of price neutral alternative materials in Akro-Mils Lawn and Garden planters is evident in the EcoResin™ and BioBamboo™ product lines. EcoResin planters are made from up to 30% non-food, non-forest plant fibers and do not sacrifice quality or price. The BioBamboo product lines are made from a blend of bamboo fibers and plant based resins which create a bio-degradable planter that minimizes its impact on the environment.
Myers Industries seeks to expand its market leadership in the Lawn and Garden Segment through unrivaled product innovation and selection, diverse manufacturing processes and superior customer satisfaction. One of these initiatives continues to be expanding the use of reprocessed and recycled materials in the manufacturing process, which helps to reduce the Company’s exposure to higher costs for virgin raw material and furthers our commitment to environmentally responsible manufacturing. In addition to sourcing sustainable eco-friendly materials, such as Coconut Coir for Fiber Grow products, the Lawn & Garden Group reprocesses plastic scrap into new containers. Beyond continued sourcing of recycled raw materials, Myers Lawn and Garden continues to innovate solutions by exploring options in bio-based resins and other alternative material sources.
Weather conditions, grower consolidation and grower supply chain adjustments to meet retail merchandising programs are some of the key external factors that influence this industry. As one of the industry leaders, the Company is well positioned to further align our capabilities to effectively meet the external challenges and changing needs of customers and the markets. The horticultural market has evolved with grower consolidation creating a more direct supply chain to serve the box stores. To position our company for continued growth, we have realigned our manufacturing operations to better serve our customers in the Midwest and South and we have opened a facility in Sparks, Nevada to be closer to our customers in the West.



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Engineered Products Segment
Myers Industries serves diverse niche markets and customers with rubber and plastic products from the Engineered Products Segment. Through our Ameri-Kart®, Patch Rubber and WEK brands, we provide an array of engineered plastic original equipment and replacement parts, tire repair materials and custom rubber and plastic components and materials. We offer a unique combination of product design, molding and finishing expertise to support our customers’ needs for efficient, single sourcing of parts and turnkey custom product development. In addition to our plastics molding capabilities, we utilize a full range of rubber molding processes that include compounding and calendering and extrusion. Additional capabilities include custom rubber formulation, mixing and testing.

WEK is a premier blow molder of custom engineered plastic components to a blue-chip customer base serving diverse end markets, including the automotive, heavy truck, recreational vehicle, marine, appliance and consumer products industries. WEK supports passenger car and truck manufacturers to create plastic components and assemblies for a wide variety of vehicle platforms. Our proven track record and expertise affords us “guest engineering” status with one of the world’s leading automakers and suppliers. Our molding and assembly capabilities produce a diversified product mix, which includes: HVAC ducts & systems, air induction tubing & components and fluid reserve tanks, as well as other proprietary products that include dock floats and waste containers. The Company’s focus in the automotive arena is on highly engineered, niche products for select automotive platforms and strategic, long-term customers - both transplants and domestics - who reward their value-added manufacturing partners. In addition, WEK provides plastic blow molded components for industries outside of automotive. In the marine industry, WEK produces a proprietary patented full range of blow molded flanged Dock Floats for creating boat docks in marinas, private clubs, boatyards and elsewhere. The floats feature one piece, no seam construction, with resistance to oil, diesel fuel and saltwater. For the waste management industry, WEK produces several varieties of Waste Carts, Recycle Bins and Waste Can Liners in styles and sizes to meet the industry’s diverse product needs. In the custom molding arena, WEK produces a wide variety of products, such as Double Wall Storage Cases, used as packaging and for storing and protecting tools, electronics, medical equipment, firearms and other valuables. Other custom items include Coolers, Residential and Commercial Downspout Systems, Trade Show Display Cases and more. WEK’s blow molding press sizes range from large and small to fit a customer’s precise product needs.
Manufacturers of recreational vehicles (“RV”) and watercraft rely on our design expertise and production capabilities to provide them an assortment of products. Through our Ameri-Kart brand, we create rotationally-molded plastic tanks for water, fuel and waste handling that are assembled to fit the precise space constraints within RV and marine craft designs. We also utilize thermoforming and rotational molding to manufacture plastic trim and interior parts for RVs. In addition to molding fuel tanks, seat components, consoles and storage tanks for watercraft, Ameri-Kart manufactures its patented Enviro-Fill® overfill prevention system (“OPS”) technology for its marine fuel tanks. Ameri-Kart is the industry’s only turnkey provider with an integrated, Environmental Protection Agency (“EPA”)-compliant marine fuel tank and patented Enviro-Fill diurnal system. This OPS/tank vent and sensor system provides venting and monitoring of the fuel level in the tank during filling and transfers a pressure signal to the deck fitting when fuel reaches a predetermined level. Integrated with its low permeation fuel tanks and certified by the EPA to meet the standards of evaporative emissions, this makes Ameri-Kart unique in offering customers a “total system” for marine fuel tank solutions. This in turn affords boat manufacturers a single source to comply with EPA and American Boat and Yacht Council (“ABYC”) refueling and emission regulations.
Our manufacturing of rubber products began more than 60 years ago with our Patch Rubber Company® brand, initially making tire patches. Today, we manufacture one of the most comprehensive lines of tire repair and retreading products in the United States. Service professionals rely on our extensive product selection and quality for safe, cost-effective repairs to passenger, truck and off-road tires. Products include the plug that fills a puncture, the cement that seats the plug, the tire innerliner patch and the final sealing compound. Patch brand repair products maintain a strong position in the tire service markets including sales through our Distribution Segment’s sales network.
Also within the capabilities of Patch Rubber, we apply our rubber calendering and compounding expertise to create a diverse portfolio of products outside of the tire repair market, such as reflective highway marking tapes. Our rubber-based tape and symbols provide the durability and brightness that construction professionals demand to replace paint for marking road repair, intersections and hazardous areas. Compared with traditional highway paint, the tape stock is easier to apply, more reflective and longer lasting. It is available in both temporary and permanent grades to meet the customers’ specific requirements.
Other custom products represent a wide range of markets and applications. These include: plastic elevated toilet seats and tub rails for the healthcare market, specialty tapes used for cable splicing in the telecommunications industry and custom rubber linings for material handling conveyors.



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Distribution Segment Overview
Our Distribution Segment includes the Myers Tire Supply® and Myers Tire Supply International brands. Myers Tire Supply is the largest U.S. distributor and single source for tire, wheel and undervehicle service tools, equipment and supplies. We buy and sell nearly 10,000 different items — everything that professionals need to service passenger, truck and off-road tires, wheels and related components. Independent tire dealers, mass merchandisers, commercial auto and truck fleets, auto dealerships, tire retreaders and general repair facilities rely on our broad product selection, rapid availability and personal service to be more productive and profitably grow their business.
In 2013, we continued to enhance our business model to optimize our domestic distribution network. We serve the domestic market through 19 sales offices and four regional distribution centers. Our network has improved overall customer service levels, reduced operating costs, and simplified the supply chain. Internationally, we have three branches in Canada and three in Central America. Sales personnel from our Akron, Ohio headquarters cover niche markets in the Far East, Middle East, South Pacific and South America. In addition, we have a joint venture partnership in India, enabling our effort to expand in emerging international markets.

We purchase products from trusted, industry-leading manufacturers to ensure quality is delivered to our customers. Each of the brand-name products we sell is associated with superior performance in its respective area. Some of these well-known brands include: Chicago Pneumatic air tools; Hennessy tire changing, balancing and alignment equipment; Corghi tire changers and balancers; Ingersoll-Rand air service equipment; HofmannUSA tire balancing and changing equipment; Rotary lifts and related equipment; Alligator VentilFabrik GMBH tire pressure monitoring systems and tire valve hardware; Perfect Equipment wheel weights; and our own Patch Rubber brand tire patches, cements and repair supplies.
An essential element of our success in the Distribution Segment is the network of field sales representatives, who deliver personalized service on a local level. Customers rely on Myers Tire Supply sales representatives to introduce the latest tools and technologies and to provide training in new product features and applications. Representatives also teach the proper use of diagnostic equipment and present on-site workshops demonstrating industry-approved techniques for tire repair and undervehicle service.
With a commitment to innovation for our customers, our Myers Tire Supply team has introduced several new product and service offerings that continue to make our customers’ experience with Myers Tire Supply uniquely valuable. These include a full range of Tire Pressure Monitoring System products, a web-based “Torque Tracker” program for commercial fleet service providers, and a vendor managed inventory program, which is designed to help our customer manage the cost of their consumable inventory and secure highly valuable tools.
While the needs and composition of our distribution markets constantly change, we adapt and deliver the new products and services that are crucial to our customers’ success. The new product pipeline is driven by a thorough understanding of the market and its customers' needs. Myers Tire Supply in turn works closely with its suppliers to develop innovative products and services to meet these needs with solutions.
The Distribution Segment is well positioned to continue its steady growth. The Myers Tire Supply (U.S.) brand is positioned to expand its leadership through superior product selection, rapid delivery and the personal service that is the hallmark of the Company’s success in the tire, wheel, and undervehicle service marketplace. The Myers Tire Supply International brand is positioned to expand distribution of tire supplies in select regions of the world, presenting new growth opportunities for our diverse manufacturing businesses. All of this can be achieved through: 1) ongoing productivity improvements in our distribution network, 2) growing within key domestic market sectors and emerging international markets, 3) delivering a continuous flow of new products with “first-to-market” speed and 4) improving efficiency and customer satisfaction through implementation of innovative supply chain management technologies. Strategic, adjacent acquisitions or investments are also a potential growth avenue in this segment.
Raw Materials & Suppliers — Manufacturing and Distribution Segments
For the manufacturing segments, the Company purchases substantially all of its raw materials from a wide range of third-party suppliers. These materials are primarily polyethylene, polypropylene, and polystyrene plastic resins, as well as synthetic and natural rubber. Most raw materials are commodity products and available from several domestic suppliers. We believe that the loss of any one supplier or group of suppliers would not have a material adverse effect on our business.
Our Distribution Segment purchases substantially all of its components from third-party suppliers and has multiple sources for its products.



10


Competition
Competition in the manufacturing segments is substantial and varied in form and size from manufacturers of similar products and of other products which can be substituted for those produced by the Company. In general, most direct competitors with the Company’s brands are private entities. Myers Industries maintains strong brand presence and market positions in the niche sectors of the markets it serves. The Company does not command substantial, overall market presence in the broad market sectors.
Competition in our Distribution Segment is generally from private, smaller local and regional businesses. Within the overall tire, wheel and undervehicle service market, Myers is the largest North American distributor of tools, equipment and supplies offered based on national coverage.
Customer Dependence
In 2013, 2012 and 2011, there were no customers that accounted for more than five percent of total net sales. Myers Industries serves thousands of customers who demand value through product selection, innovation, quality, delivery and responsive personal service. Our brands foster satisfied, loyal customers who have recognized our performance through numerous supplier quality awards.
Employees
As of December 31, 2013, Myers Industries had a total of 3,401 full-time and part-time employees. Of these, 2,894 were employed in the Company’s manufacturing segments, including: 1,168 in Material Handling, 713 in Engineered Products, and 1,013 in Lawn and Garden. The Distribution Segment employed 447 personnel. The Company’s corporate offices had 60 employees.
As of December 31, 2013, the Company had approximately 380 employees represented by labor unions. Collective bargaining agreements between us and these labor unions expire March 2014 and November 2014, representing approximately 150 and 230 employees, respectively. We consider our relationship with our employees generally to be satisfactory.
 
(d)
Financial Information About Geographic Areas
The response to this section of Item 1 is contained in the Industry Segments footnote of the Notes to Consolidated Financial Statements under Item 8 of this report.
 
(e)
Available Information
Filings with the SEC.     As a public company, we regularly file reports and proxy statements with the Securities and Exchange Commission ("SEC"), such as:
* annual reports on Form 10-K;
* quarterly reports on Form 10-Q;
* current reports on Form 8-K; and
* proxy statements on Schedule 14A.
Anyone may read and copy any of the materials we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information regarding operations of the Public Reference Room may also be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website that contains our reports, proxy and information statements, and our other SEC filings; the address of that site is http://www.sec.gov.
Also, we make our SEC filings available free of charge on our own internet site as soon as reasonably practicable after we have filed with the SEC. Our internet address is http://www.myersindustries.com. The content on the Company’s website is available for informational purposes only and is not incorporated by reference into this Form 10-K.
Corporate Governance.     We have a Code of Business Conduct for our employees and members of our Board of Directors. A copy of this Code is posted on our website in the section titled “Investor Relations”. We will satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, any provision of this Code with respect to our executive officers or directors by disclosing the nature of that amendment or waiver.
Our website also contains additional information about our corporate governance policies, including the charters of our standing board committees. Any of these items are available in print to any shareholder who requests them. Requests should be sent to Corporate Secretary, Myers Industries, Inc., 1293 S. Main Street, Akron, Ohio 44301.


11



ITEM 1A.    Risk Factors
This Form 10-K and the information we are incorporating by reference contain forward-looking statements within the meaning of federal securities laws, including information regarding the Company’s 2014 financial outlook, future plans, objectives, business prospects and anticipated financial performance. You can identify these statements by the fact that they include words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” or variations of these words, or similar expressions. These forward-looking statements are not statements of historical facts and represent only our current expectations regarding such matters. These statements inherently involve a wide range of known and unknown uncertainties. The Company’s actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission. Given these factors, as well as other variables that may affect our operating results, you should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or trends in future periods. We expressly disclaim any obligation or intention to provide updates to the forward-looking statements and the estimates and assumptions associated with them.
Risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements include:
Any significant increase in the cost of raw materials or disruption in the availability of raw materials could adversely affect our performance.
Our ability to manage our cost structure can be adversely affected by movements in commodity and other raw material prices. Our primary raw materials include plastic resins, colorants and natural and synthetic rubbers. Plastic resins in particular are subject to substantial short term price fluctuations, including those arising from supply shortages and changes in the price of natural gas, crude oil and other petrochemical intermediates from which resins are produced, as well as other factors. Over the past several years, we have at times experienced rapidly increasing resin prices. The Company’s revenue and profitability may be materially and adversely affected by these price fluctuations.
Market conditions may limit our ability to raise selling prices to offset increases in our raw material input costs. If we are unsuccessful in developing ways to mitigate raw material cost increases, we may not be able to improve productivity or realize our ongoing cost reduction programs sufficiently to help offset the impact of these increased raw material costs. As a result, higher raw material costs could result in declining margins and operating results.
Changes in raw material availability may also occur due to events beyond our control, including natural disasters such as floods, tornadoes and hurricanes. Our specific molding technologies and/or product specifications can limit our ability to locate alternative suppliers to produce certain products.
We may incur inherent risks associated with our strategic growth initiatives.
Our growth initiatives include: internal growth driven by strong brands and new product innovation; development of new, high-growth markets and expansion in existing niche markets; strengthened customer relationships through value-added initiatives and key product partnerships; investments in new technology and processes to reinforce market strength and capabilities in key business groups; consolidation and rationalization activities to further reduce costs and improve productivity within our manufacturing and distribution footprint; an opportunistic and disciplined approach to strategic, bolt-on acquisitions to accelerate growth in our market positions; and potential divestitures of businesses with non-strategic products or markets.
While this is a continuous process, all of these activities and initiatives have inherent risks and there remain significant challenges and uncertainties, including economic and general business conditions that could limit our ability to achieve anticipated benefits associated with announced strategic initiatives and affect our financial results. We may not achieve any or all of these goals and are unable to predict whether these initiatives will produce significant revenues or profits.





12


We may not realize the improved operating results that we anticipate from past and recent acquisitions or from acquisitions we may make in the future and we may experience difficulties in integrating the acquired businesses or may inherit significant liabilities related to such businesses.
We explore opportunities to acquire businesses that we believe are related to our core competencies from time to time, some of which may be material to us. We expect such acquisitions will produce operating results consistent with our other operations; however, we may be unable to achieve the benefits expected to be realized from our acquisitions. In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following:
we may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions;
we may have delays in realizing the benefits of our strategies for an acquired business;
we may not be able to retain key employees necessary to continue the operations of an acquired business;
acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; and
acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital.
Our results of operations and financial condition could be adversely affected by a downturn in the general markets or the general economic environment.
We operate in a wide range of geographies, primarily North America, Central America and South America. Worldwide and regional economic, business and political conditions, including changes in the economic conditions of the broader markets and in our individual niche markets, could have an adverse affect on one or more of our operating segments.
We operate in a very competitive business environment.
Each of our segments participates in markets that are highly competitive. Many of our competitors sell their products at prices lower than ours and we compete primarily on the basis of product quality, product performance, value, and supply chain competency. Our competitive success also depends on our ability to maintain strong brands, customer relationships and the belief that customers will need our products and services to meet their growth requirements. The development and maintenance of such brands requires continuous investment in brand building, marketing initiatives and advertising. The competition that we face in all of our markets — which varies depending on the particular business segment, product lines and customers — may prevent us from achieving sales, product pricing and income goals, which could affect our financial condition and results of operations.
The results of operations for our Lawn and Garden Segment are influenced by weather conditions.
Demand for our Lawn and Garden Segment products is influenced by weather, particularly weekend weather during the peak gardening season. Additionally, product demand in this segment is strongest in the first and fourth quarters and weakest in the third quarter, as our customers (in particular greenhouses and nurseries) order our products in advance of the growing season. As a result, our business, financial results, cash flow and our ability to service our debt could be adversely affected by certain weather patterns such as unseasonably cool or warm temperatures, hurricanes, water shortages or floods.
Our operations depend on our ability to maintain continuous, uninterrupted production at our manufacturing facilities, which are subject to physical and other risks that could disrupt production.
We are subject to inherent risks in our diverse manufacturing and distribution activities, including, but not limited to: product quality, safety, licensing requirements and other regulatory issues, environmental events, loss or impairment of key manufacturing or distribution sites, disruptions in logistics and transportation services, labor disputes and industrial accidents. While we maintain insurance covering our manufacturing and production facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of our facilities due to accident, fire, explosion, or natural disaster, whether short or long-term, could have a material adverse effect on our business, financial condition and results of operations.
Unexpected failures of our equipment and machinery may also result in production delays, revenue loss and significant repair costs, as well as injuries to our employees. Any interruption in production capability may require us to make large capital expenditures to remedy the situation, which could have a negative impact on our profitability and cash flows. Our business interruption insurance may not be sufficient to offset the lost revenues or increased costs that we may experience during a disruption of our operations. A temporary or long-term business disruption could result in a permanent loss of customers. If this were to occur, our future sales levels, and therefore our profitability, could be materially adversely affected.

13


We derive a portion of our revenues from direct and indirect sales outside the United States and are subject to the risks of doing business in foreign countries.
We currently operate manufacturing, sales and service facilities outside of the United States, particularly in Canada and Brazil. For the twelve months ended December 31, 2013, international net sales accounted for approximately 17% of our total net sales from continuing operations. Accordingly, we are subject to risks associated with operations in foreign countries, including:
fluctuations in currency exchange rates;
limitations on the remittance of dividends and other payments by foreign subsidiaries;
limitations on foreign investment;
additional costs of compliance with local regulations; and
in certain countries, higher rates of inflation than in the United States.
In addition, our operations outside the United States are subject to the risk of new and different legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations and potentially adverse tax consequences. The costs related to our international operations could adversely affect our operations and financial results in the future.
Our future performance depends in part on our ability to develop and market new products if there are changes in technology, regulatory requirements or competitive processes.
Changes in technology, regulatory requirements and competitive processes may render certain products obsolete or less attractive. Our performance in the future will depend in part on our ability to develop and market new products that will gain customer acceptance and loyalty, as well as our ability to adapt our product offerings and control our costs to meet changing market conditions. Our operating performance would be adversely affected if we were to incur delays in developing new products or if such products did not gain market acceptance. There can be no assurance that existing or future products will be sufficiently successful to enable us to effectively compete in our markets or, should new product offerings meet with significant customer acceptance, that one or more current or future competitors will not introduce products that render our products noncompetitive.
We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others.
In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets and employ various methods, including confidentiality agreements with employees and consultants, to protect our know-how and trade secrets. However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. Additionally, in the future we may license patents, trademarks, trade secrets and similar proprietary rights to third parties. While we attempt to ensure that our intellectual property and similar proprietary rights are protected when entering into business relationships, third parties may take actions that could materially and adversely affect our rights or the value of our intellectual property, similar proprietary rights or reputation. In the future, we may also rely on litigation to enforce our intellectual property rights and contractual rights and, if not successful, we may not be able to protect the value of our intellectual property. Furthermore, no assurance can be given that we will not be subject to claims asserting the infringement of the intellectual property rights of third parties seeking damages, the payment of royalties or licensing fees and/or injunctions against the sale of our products. Any litigation could be protracted and costly and could have a material adverse effect on our business and results of operations regardless of its outcome.
If we are unable to maintain access to credit financing, our business may be adversely affected.
The Company’s ability to make payments and to refinance our indebtedness, fund planned capital expenditures and acquisitions and pay dividends will depend on our ability to generate cash in the future and retain access to credit financing. This, to some extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
We cannot provide assurance that our business will generate sufficient cash flow from operating activities or that future borrowings will be available to us under our credit facilities in amounts sufficient to enable us to service debt, make necessary capital expenditures or fund other liquidity needs. We may need to refinance all or a portion of our indebtedness, on or before maturity. We cannot be sure that we would be able to refinance any of our indebtedness on commercially reasonable terms or at all.


14


The credit facilities contain restrictive covenants and cross default provisions that require us to maintain specified financial ratios. The Company’s ability to satisfy those financial ratios can be affected by events beyond our control, and we cannot be assured we will satisfy those ratios. A breach of any of these financial ratio covenants or other covenants could result in a default. Upon the occurrence of an event of default, the lenders could elect to declare the applicable outstanding indebtedness due immediately and payable and terminate all commitments to extend further credit. We cannot be sure that our lenders would waive a default or that we could pay the indebtedness in full if it were accelerated.
Future claims, litigation and regulatory actions could adversely affect our financial condition and our ability to conduct our business.
While we strive to ensure that our products comply with applicable government regulatory standards and internal requirements and that our products perform effectively and safely, customers from time to time could claim that our products do not meet contractual requirements, and users could be harmed by use or misuse of our products. This could give rise to breach of contract, warranty or recall claims, or claims for negligence, product liability, strict liability, personal injury or property damage. Product liability insurance coverage may not be available or adequate in all circumstances. In addition, claims may arise related to patent infringement, environmental liabilities, distributor terminations, commercial contracts, antitrust or competition law, employment law and employee benefits issues and other regulatory matters. While we have in place processes and policies to mitigate these risks and to investigate and address such claims as they arise, we cannot predict the underlying costs to defend or resolve such claims.
Current and future environmental and other governmental laws and requirements could adversely affect our financial condition and our ability to conduct our business.
Our operations are subject to federal, state, local and foreign environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the handling, use, treatment, storage and disposal of, or exposure to, hazardous wastes and other materials and require clean up of contaminated sites. Some of these laws and regulations require us to obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the environment and periodically may be subject to modification, renewal and revocation by issuing authorities. Fines, penalties and other civil or criminal sanctions may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms and conditions of required permits. Certain environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for the cost of investigation or remediation of contaminated sites upon the current or, in some cases, the former site owners or operators (or their predecessor entities) and upon parties who arranged for the disposal of wastes or transported or sent those wastes to an off-site facility for treatment or disposal, regardless of when the release of hazardous substances occurred or the lawfulness of the activities giving rise to the release. Such liability can be imposed without regard to fault and, under certain circumstances, can be joint and several, resulting in one party being held responsible for the entire obligation.
While we have not been required historically to make significant capital expenditures in order to comply with applicable environmental laws and regulations, we cannot predict with any certainty our future capital expenditure requirements because of continually changing compliance standards and environmental technology. Furthermore, violations or contaminated sites that we do not know about, including contamination caused by prior owners and operators of such sites, or at sites formerly owned or operated by us or our predecessors in connection with discontinued operations, could result in additional compliance or remediation costs or other liabilities, which could be material.
In that we may be a potentially responsible party (“PRP”) of the New Idria Mercury Mine, the Company accrued costs related to performing a remedial investigation and feasibility study. As investigation and remediation proceed, it is likely that adjustments to the liability will be necessary to reflect new information. Estimates of the Company’s liability are based on current facts, laws, regulations and technology. Estimates of the Company’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluation and cost estimates, the extent of corrective actions that may be required and the number and financial condition of other PRPs, as well as the extent of their responsibility for the remediation, and the availability of insurance coverage for these expenses.
We have limited insurance coverage for potential environmental liabilities associated with historic and current operations and we do not anticipate increasing such coverage in the future. We may also assume significant environmental liabilities in acquisitions. Such costs or liabilities could adversely affect our financial situation and our ability to conduct our business.



15


Environmental regulations specific to plastic products and containers could adversely affect our ability to conduct our business.
Federal, state, local and foreign governments could enact laws or regulations concerning environmental matters that increase the cost of producing, or otherwise adversely affect the demand for, plastic products. Legislation that would prohibit, tax or restrict the sale or use of certain types of plastic and other containers, and would require diversion of solid wastes such as packaging materials from disposal in landfills, has been or may be introduced in the U.S. Congress, in state legislatures and other legislative bodies. While container legislation has been adopted in a few jurisdictions, similar legislation has been defeated in public referenda in several states, local elections and many state and local legislative sessions. There can be no assurance that future legislation or regulation would not have a material adverse effect on us. Furthermore, a decline in consumer preference for plastic products due to environmental considerations could have a negative effect on our business.
Our insurance coverage may be inadequate to protect against potential hazardous incidents to our business.
We maintain property, business interruption, product liability and casualty insurance coverage, but such insurance may not provide adequate coverage against potential claims, including losses resulting from war risks, terrorist acts or product liability claims relating to products we manufacture. Consistent with market conditions in the insurance industry, premiums and deductibles for some of our insurance policies have been increasing and may continue to increase in the future. In some instances, some types of insurance may become available only for reduced amounts of coverage, if at all. In addition, there can be no assurance that our insurers would not challenge coverage for certain claims. If we were to incur a significant liability for which we were not fully insured or that our insurers disputed, it could have a material adverse effect on our financial position, results of operations or cash flows.
Our business operations could be significantly disrupted if members of our senior management team were to leave.
Our success depends to a significant degree upon the continued contributions of our senior management team. Our senior management team has extensive manufacturing, finance and engineering experience, and we believe that the depth of our management team is instrumental to our continued success. The loss of any of our key executive officers in the future could significantly impede our ability to successfully implement our business strategy, financial plans, expansion of services, marketing and other objectives.
Unforeseen future events may negatively impact our economic condition.
Future events may occur that would adversely affect the reported value of our assets. Such events may include, but are not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on our customer base, or a material adverse change in our relationship with significant customers.

Equity Ownership Concentration

Based solely on a report provided to the Company by market intelligence firm IPREO, for which the Company disclaims any responsibility, Gabelli Funds, LLC, GAMCO Asset Management Inc., MJG Associates, Inc., Gabelli Securities, Inc., Teton Advisors, Inc., GGCP, Inc., and GAMCO Investors, Inc., (collectively, the “Gamco Group”), beneficially owned 5,613,187 of our common shares as of December 31, 2013, representing approximately 16.8% of our outstanding common shares. Combined, these parties may have sufficient voting power to influence actions requiring the approval of our shareholders.
Legal & Regulatory Actions
Changes in laws and regulations and approvals and decisions of courts, regulators, and governmental bodies on any legal claims known or unknown, could have an adverse affect on the Company’s financial results.

ITEM 1B.    Unresolved Staff Comments
None.

16


ITEM 2.    Properties
The following table sets forth certain information with respect to properties owned by the Company:

 
 
Distribution
 
 
Location
 
Approximate
Floor Space
(Square Feet)
 
Approximate
Land Area
(Acres)
 
Use
Akron, Ohio
 
129,000

 
8

 
Executive offices and warehousing
Akron, Ohio
 
60,000

 
5

 
Distribution center
Akron, Ohio
 
31,000

 
2

 
Warehousing
Pomona, California
 
18,000

 
1

 
Sales and distribution center
 
 
 
 
 
 
 
 
 
Manufacturing
 
 
Sandusky, Ohio
 
305,000

 
8

 
Manufacturing and distribution
Springfield, Missouri
 
227,000

 
19

 
Manufacturing and distribution
Wadsworth, Ohio
 
197,000

 
23

 
Manufacturing and distribution
Sparks, Nevada
 
185,000

 
11

 
Manufacturing and distribution
Bristol, Indiana
 
185,000

 
12

 
Manufacturing and distribution
Bluffton, Indiana
 
175,000

 
17

 
Manufacturing and distribution
Roanoke Rapids, North Carolina
 
172,000

 
20

 
Manufacturing and distribution
Dawson Springs, Kentucky
 
125,000

 
26

 
Manufacturing and distribution
Reidsville, North Carolina
 
120,000

 
17

 
Manufacturing and distribution
Jefferson, Ohio
 
113,000

 
9

 
Manufacturing and distribution
Waco, Texas
 
60,000

 
5

 
Manufacturing and distribution
Sebring, Florida
 
26,000

 
10

 
Manufacturing and distribution
The following table sets forth certain information with respect to facilities leased by the Company.
 
 
 
Manufacturing & Distribution
 
 
Location
 
Approximate
Floor Space
(Square Feet)
 
Expiration Date
of Lease
 
Use
Middlefield, Ohio
 
632,000

 
September 30, 2025
 
Manufacturing and distribution
Elyria, Ohio
 
451,000

 
September 30, 2015
 
Distribution center
Brantford, Ontario, Canada
 
216,000

 
January 31, 2014*
 
Manufacturing and distribution
Cassopolis, Michigan
 
198,000

 
October 31, 2015
 
Manufacturing and distribution
South Beloit, Illinois
 
160,000

 
September 30, 2017
 
Manufacturing and distribution
Springfield, Missouri
 
120,000

 
August 31, 2016
 
Manufacturing and distribution
Lauro de Freitas City, Bahia, Brazil
 
77,000

 
June 30, 2015
 
Manufacturing and distribution
Ibipora, Parana, Brazil
 
68,000

 
December 31, 2015
 
Manufacturing and distribution
Brantford, Ontario, Canada
 
58,000

 
January 31, 2015
 
Distribution center
Southaven, Mississippi
 
56,000

 
September 30, 2016
 
Distribution center
Jaguariuna, Brazil
 
54,000

 
April 30, 2017
 
Manufacturing and distribution
Springfield, Missouri
 
51,000

 
August 31, 2016
 
Manufacturing and distribution
Springfield, Missouri
 
49,000

 
August 31, 2016
 
Manufacturing and distribution
Burlington, Ontario, Canada
 
46,000

 
January 31, 2015
 
Manufacturing and distribution
Salt Lake City, Utah
 
31,000

 
October 31, 2016
 
Distribution center
Mississuaga, Ontario, Canada
 
27,000

 
December 31, 2014
 
Manufacturing and distribution
Milford, Ohio
 
22,000

 
November 30, 2015
 
Administration and sales
Twinsburg, Ohio
 
11,000

 
October 31, 2023
 
Executive offices

* Manufacturing operations were ceased and moved to Middlefield, Ohio and Sparks, Nevada.

17



The Company also leases facilities in 19 locations throughout the United States and Canada which, in the aggregate, amount to approximately 50,000 square feet of warehouse and office space. All of these locations are used by the Distribution Segment.
The Company believes that all of its properties, machinery and equipment generally are well maintained and adequate for the purposes for which they are used.

ITEM 3.    Legal Proceedings
The Company is a defendant in various lawsuits and a party to various other legal proceedings, in the ordinary course of business, some of which are covered in whole or in part by insurance. We believe that the outcome of these lawsuits and other proceedings will not individually or in the aggregate have a future material adverse effect on our consolidated financial position, results of operations or cash flows.
New Idria Mercury Mine
Effective October 2011, the U.S. Environmental Protection Agency (“EPA”) added the New Idria Mercury Mine site located near Hollister, California to the Superfund National Priorities List because of alleged contaminants discharged to California waterways. The New Idria Quicksilver Mining Company, founded in 1936, and later renamed the New Idria Mining & Chemical Company ("NIMCC") owned and/or operated the New Idria Mine through 1976. In 1981 NIMCC was merged into Buckhorn Metal Products Inc. and subsequently acquired by Myers Industries in 1987. The EPA contends that past mining operations have resulted in mercury contamination and acid mine drainage at the mine site, in the San Carlos Creek, Silver Creek and a portion of Panoche Creek and that other downstream locations may also be impacted.
Since Buckhorn Inc. may be a potentially responsible party (“PRP”) of the New Idria Mercury Mine, the Company recognized an expense of $1.9 million, on an undiscounted basis, in 2011 related to performing a remedial investigation and feasibility study to determine the extent of remediation and the screening of alternatives. Expenses of approximately $0.6 million have been incurred and charged against the reserve classified in Other Liabilities on the Consolidated Statements of Financial Position as of December 31, 2013. As investigation and remediation proceed, it is likely that adjustments to the reserved expense will be necessary to reflect new information. Estimates of the Company’s liability are based on current facts, laws, regulations and technology. Estimates of the Company’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluation and cost estimates, the extent of corrective actions that may be required, the number and financial condition of other PRPs as well as the extent of their responsibility for the remediation, and the availability of insurance coverage for these expenses. At this time, further remediation cost estimates are not known and have not been prepared.
In November 2011 the EPA completed an interim removal project at the New Idria Mercury Mine site. It is expected this removal action will be part of the final remediation strategy for the site. According to informal reports, EPA’s interim removal project costs were approximately $0.5 million. It is possible that at some future date the EPA will seek recovery of the costs of this work from PRPs.
California Regional Water Quality Control Board
A number of parties, including the Company and its subsidiary, Buckhorn Inc. (“Buckhorn”), were identified in a planning document adopted in October 2008 by the California Regional Water Quality Control Board, San Francisco Bay Region (“RWQCB”). The planning document relates to the presence of mercury, including amounts contained in mining wastes, in and around the Guadalupe River Watershed (“Watershed”) region in Santa Clara County, California. Buckhorn has been alleged to be a successor in interest to NIMCC which owned property and performed mining operations in a portion of the Watershed area. The Company has not been contacted by the RWQCB or by other parties who have been involved in Watershed clean-up efforts that have been initiated as a result of the adoption of this planning document. Although assertion of a claim by the RWQCB or an other party involved in this clean-up effort is reasonably possible, it is not possible at this time to estimate the amount of any obligation the Company may incur for these cleanup efforts within the Watershed region, or whether such cost would be material to the Company’s financial statements.






18



EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information concerning the executive officers of the Registrant as of December 31, 2013. Executive officers are appointed annually by the Board of Directors.
 
Name
 
Age
 
Years as
Executive Officer
 
Title
John C. Orr
 
63

 
11

 
President and Chief Executive Officer
Greggory W. Branning
 
52

 
2

 
Senior Vice President, Chief Financial Officer and Corporate Secretary
Mr. Orr, President and Chief Executive Officer, was appointed to his current position on May 1, 2005. Mr. Orr had been President and Chief Operating Officer since 2003. Prior to that Mr. Orr was General Manager of Buckhorn Inc., one of the Company’s material handling subsidiaries. Before coming to the Company, Mr. Orr had been employed by The Goodyear Tire & Rubber Company for 28 years. His last position at Goodyear was Vice President — North America.
Mr. Branning, Senior Vice President, Chief Financial Officer and Corporate Secretary, was appointed to his current position on September 1, 2012. Prior to that he was with Danaher Corporation, where he served as Vice President of Finance and Chief Financial Officer of Thomson Industries, a Danaher subsidiary. Mr. Branning joined Danaher Corporation in 2003 where he served in various leadership positions in various subsidiaries of Danaher.
Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant’s Directors, certain of its executive officers and persons who own more than ten percent of its Common Stock (“Insiders”) to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the New York Stock Exchange, Inc., and to furnish the Company with copies of all such forms they file. In 2013, Form 4s were not filed on a timely basis for the following individuals: John C. Orr, executive officer, (one untimely Form 4) and Sarah R. Coffin, Director, (one untimely Form 4).

19


PART II
 

ITEM 5.
Market for Registrant’s Common Stock and Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s Common Stock is traded on the New York Stock Exchange (ticker symbol MYE). The approximate number of shareholders of record at December 31, 2013 was 1,300. High and low stock prices and dividends for the last two years were:
 
2013
 
Sales Price
 
 
Quarter Ended
 
High
 
Low
 
Dividends
March 31
 
$
15.33

 
$
13.47

 
$
0.09

June 30
 
15.64

 
12.85

 
0.09

September 30
 
20.34

 
15.73

 
0.09

December 31
 
21.59

 
17.46

 
0.09

 
 
 
 
 
 
 
2012
 
Sales Price
 
 
Quarter Ended
 
High
 
Low
 
Dividends
March 31
 
$
14.75

 
$
12.36

 
$
0.08

June 30
 
17.88

 
15.32

 
0.08

September 30
 
17.42

 
14.40

 
0.08

December 31
 
16.03

 
13.51

 
0.08

Purchases of equity securities by the issuer
The following table presents information regarding the Company’s stock purchase plan during the three months ended December 31, 2013.
 
Total Number of
Shares Purchased
 
Average Price Paid
per Share
 
Total Number of
Shares Purchased as
Part of the Publicly
Announced Plans or Programs
 
Maximum number
of Shares that may
yet be Purchased
Under the Plans or Programs (1)
10/1/13 to 10/31/13

 
$

 
660,301

 
7,339,699

11/1/13 to 11/30/13
115,400

 
18.24

 
775,701

 
7,224,299

12/1/13 to 12/31/13
37,079

 
19.45

 
812,780

 
7,187,220

 
(1)
On July 11, 2013, the Company authorized the repurchase of up to an additional five million shares of its common stock. This authorization was in addition to the Board authorized repurchase of up to five million shares that was announced on May 2, 2011. On February 20, 2014, the Company's Board of Directors authorized $40 million of common stock repurchases to be completed in 2014. The Company previously completed the repurchase of approximately five hundred thirty five thousand shares in April 2013, and two million shares in 2011 pursuant to Rule 10b5-1 plans, which were adopted pursuant to the 2011 authorized share repurchase dated June 1, 2011.


20


See Item 12 of this Form 10-K for the Equity Compensation Plan Information Table which is incorporated herein by reference.

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2013
 
 
 
2008
2009
2010
2011
2012
2013
Myers Industries Inc.
Annual Return %
 
17.86
10.64
30.16
25.42
42.35
Cum $
100.00
117.86
130.40
169.72
212.86
303.02
S&P 500 Index - Total Return
Annual Return %
 
26.46
15.06
2.11
16.00
32.39
Cum $
100.00
126.46
145.51
148.59
172.37
228.19
S&P 600 Index - Total Return
Annual Return %
 
25.27
26.31
1.02
14.08
41.31
Cum $
100.00
125.27
158.60
160.22
182.78
258.29



21


ITEM 6.    Selected Financial Data
Thousands of Dollars, Except Per Share Data
 
2013
 
2012
 
2011
 
2010
 
2009
Operations for the Year
 
 
 
 
 
 
 
 
 
Net sales
$
825,210

 
$
791,188

 
$
755,654

 
$
737,618

 
$
701,834

Cost of sales
607,582

 
575,907

 
557,385

 
573,094

 
530,939

Selling
91,739

 
85,519

 
81,475

 
74,185

 
70,999

General and administrative
81,956

 
77,906

 
77,136

 
65,968

 
77,297

Impairment charges(1)

 

 
1,249

 
72,014

 
5,462

Other income(2)

 

 

 
(3,827
)
 

Interest — net
4,542

 
4,515

 
4,722

 
7,205

 
8,304

Total costs and expenses
785,819

 
743,847

 
721,967

 
788,639

 
693,001

Income (loss) from continuing operations before income taxes
39,391

 
47,341

 
33,687

 
(51,021
)
 
8,833

Income taxes
13,389

 
17,379

 
9,182

 
(8,187
)
 
1,838

Net income (loss)
$
26,002

 
$
29,962

 
$
24,505

 
$
(42,834
)
 
$
6,995

Net income (loss) per basic share
$
0.77

 
$
0.89

 
$
0.71

 
$
(1.21
)
 
$
0.20

Net income (loss) per diluted share
$
0.76

 
$
0.88

 
$
0.71

 
$
(1.21
)
 
$
0.20

Financial Position — At Year End
 
 
 
 
 
 
 
 
 
Total assets
$
469,457

 
$
484,856

 
$
428,757

 
$
432,395

 
$
509,966

Current assets
234,910

 
239,596

 
218,452

 
213,847

 
206,548

Current liabilities
150,583

 
114,477

 
110,656

 
106,331

 
169,025

Working capital
84,327

 
125,119

 
107,796

 
107,516

 
37,523

Other assets
85,069

 
94,777

 
69,371

 
66,733

 
145,000

Property, plant and equipment — net
149,478

 
150,483

 
140,934

 
151,815

 
158,418

Less:
 
 
 
 
 
 
 
 
 
Long-term debt, less current portion
44,347

 
92,814

 
73,725

 
83,530

 
38,890

Other long term liabilities
14,687

 
17,865

 
14,343

 
5,936

 
5,682

Deferred income taxes
24,333

 
29,678

 
23,893

 
24,793

 
38,371

Shareholders’ Equity
235,507

 
230,022

 
206,140

 
211,805

 
257,998

Common Shares Outstanding
33,572,778

 
33,480,189

 
33,420,488

 
35,315,732

 
35,286,129

Book Value Per Common Share
$
7.01

 
$
6.87

 
$
6.17

 
$
6.00

 
$
7.31

Other Data
 
 
 
 
 
 
 
 
 
Dividends paid(3)
$
9,103

 
$
13,006

 
$
9,523

 
$
9,209

 
$
8,436

Dividends declared per Common Share
$
0.36

 
$
0.32

 
$
0.28

 
$
0.26

 
$
0.24

Average Basic Common Shares Outstanding during the year
33,588,720

 
33,597,020

 
34,584,558

 
35,304,817

 
35,266,939

(1)
In 2011, the Company recorded $0.9 million of impairment charges for long-lived assets related to the Material Handling Segment and $0.3 million of impairment charges for long-lived assets in the Lawn and Garden Segment. In 2010, the Company recorded a goodwill impairment charge of $72.0 million in its Lawn and Garden Segment. In 2009, the Company had impairment charges of $5.5 million related to certain property, plant and equipment related to the restructuring plans in its manufacturing segments.
(2)
In 2010, the Company recorded a non-operating gain of $3.8 million ($4.4 million, net of related expenses) related to a favorable claims settlement.
(3)
Dividends in 2012 reflect the fourth quarter dividend paid in 2012, for a total of five dividend payments in calendar year 2012.

22


ITEM 7.    Management’s Discussion and Analysis of Results of Operations and Financial Condition
Executive Overview
The Company conducts its business activities in four distinct business segments, including three in manufacturing and one in distribution. The manufacturing segments consist of: Material Handling, Lawn and Garden, and Engineered Products.
In our manufacturing segments, the Company designs, manufactures, and markets a variety of plastic and rubber products. These products range from plastic reusable material handling containers and small parts storage bins to plastic horticultural pots and hanging baskets, decorative resin planters, plastic and rubber OEM parts, tire repair materials, and custom plastic and rubber products. Our Distribution Segment is engaged in the distribution of tools, equipment and supplies used for tire, wheel and undervehicle service on passenger, heavy truck and off-road vehicles.
Results of Operations: 2013 versus 2012
Net Sales:
 
(dollars in millions)
 
 
 
 
 
 
 
Segment
2013
 
2012
 
Change
 
% Change
Material Handling
$
322.9

 
$
286.0

 
$
36.9

 
13
 %
Lawn & Garden
204.9

 
205.8

 
(0.9
)
 
 %
Distribution
177.4

 
176.6

 
0.8

 
 %
Engineered Products
137.7

 
141.7

 
(4.0
)
 
(3
)%
Intra-segment elimination
(17.7
)
 
(18.9
)
 
1.2

 
6
 %
TOTAL
$
825.2

 
$
791.2

 
$
34.0

 
4
 %
Net sales for 2013 were $825.2 million, an increase of $34.0 million or 4% compared to the prior year. Net sales increased $33.1 million due to the acquisition sales of Plasticos Novel do Nordeste S. A. ("Novel") and Jamco Products Inc. ("Jamco") which were acquired in 2012, along with $12.6 million of improved pricing. The increase in net sales was partially offset by lower sales volumes of $4.7 million and unfavorable foreign currency translation of $7.0 million.
Net sales in the Material Handling Segment increased $36.9 million or 13% in 2013 compared to 2012. The net increase in sales was mainly attributable to the inclusion of $33.1 million of net sales from the acquisition of Novel and Jamco which were completed in the second half of 2012. Also contributing to the increase in net sales was improved pricing of $4.0 million and higher volume of $3.3 million, driven by sales in the agricultural and distribution markets. The increase in net sales noted above was partially offset by unfavorable currency translation of $3.5 million.
Net sales in the Lawn and Garden Segment in 2013 decreased $0.9 million compared to 2012. The decrease in net sales was attributable to a reduction in sales volume of $5.5 million due primarily to timing of customer orders for the coming season and production and distribution start-up issues in the fourth quarter from our rationalization plan and $3.2 million from the effect of unfavorable currency translation. The decrease in net sales was offset by improved pricing of $7.8 million to mitigate higher raw material costs.
Net sales in the Distribution Segment increased $0.8 million in 2013 compared to 2012. The increase in net sales was attributable to $1.0 million in higher sales volume, primarily in equipment and from new product introductions. This increase was offset by unfavorable currency translation of $0.2 million.

In the Engineered Products Segment, net sales in 2013 decreased $4.0 million or 3% compared to 2012. Despite strong demand in our recreational vehicle and marine markets, decreases in our custom markets resulted in lower volume of $4.6 million. This decrease in net sales was slightly offset by higher selling prices of $0.6 million.
Cost of Sales & Gross Profit:
 
(dollars in millions)
 
 
 
 
Cost of Sales and Gross Profit
 
2013
 
2012
Cost of sales
 
$
607.6

 
$
575.9

Gross profit
 
$
217.6

 
$
215.3

Gross profit as a percentage of sales
 
26.4
%
 
27.2
%

23


Gross profit increased primarily from higher sales. Gross profit margin decreased to 26.4% for 2013 compared to 27.2% in the prior year. Productivity improvements were offset by higher raw material costs and approximately $10.0 million of additional costs for restructuring and related charges in 2013 compared to the same period in the prior year. Charges in 2013 included unabsorbed overhead costs from restructuring actions taken in our Lawn and Garden Segment in the current year. Cost of sales were also impacted by raw material costs, primarily for plastic resins, which were, on average, approximately 10% higher for polypropylene and polyethyne in 2013 compared to the prior year.
Selling, General and Administrative Expenses:
 
(dollars in millions)
 
 
 
 
 
 
 
 
SG&A Expenses
 
2013
 
2012
 
Change
 
% Change
SG&A expenses
 
$
173.7

 
$
163.4

 
$
10.3

 
6
%
SG&A expenses as a percentage of sales
 
21.0
%
 
20.7
%
 
 
 
 
Selling, general and administrative (“SG&A”) expenses increased $10.3 million or 6% compared with 2012. The inclusion of the Novel and Jamco acquisitions in the second half of 2012 contributed $7.2 million of incremental SG&A costs in 2013 compared to the same period in the prior year. The increase in SG&A expenses in 2013 also included higher consulting costs of approximately $2.3 million, primarily related to our information technology initiatives. In addition, higher bad debt expense in 2013 as compared to 2012 was attributable to the reversal of bad debt expense in 2012 of $1.4 million from the recovery of a bad debt established in the previous year. These increases were partially offset by a reduction in freight expense of $1.1 million due to lower volumes. Also, SG&A expense for 2013 included restructuring and other related charges of $2.7 million compared to $3.4 million for severance, consulting and lease obligation costs for 2012. Gains on the sale of property sold in 2012 were $1.1 million. Shipping and handling costs, including freight, are primarily classified as SG&A expenses.
Interest Expense:
 
(dollars in millions)
 
 
 
 
 
 
 
 
Net Interest Expense
 
2013
 
2012
 
Change
 
% Change
Net interest expense
 
$
4.5

 
$
4.5

 
$

 
 %
Outstanding borrowings, net of deferred financing costs
 
$
44.3

 
$
92.8

 
$
(48.5
)
 
(52
)%
Average borrowing rate
 
4.92
%
 
4.91
%
 
 
 
 
Net interest expense was $4.5 million in both 2013 and 2012. The weighted average level of outstanding borrowings was approximately $95.1 million in 2013 compared to $91.9 million in 2012. The decrease in outstanding borrowings at December 31, 2013 compared to December 31, 2012 was primarily due to the repayment of the $35 million Senior notes and net repayment on the credit facility during 2013.
Income Taxes:
 
(dollars in millions)
2013
 
2012
Income before taxes
$
39.4

 
$
47.3

Income tax expense
$
13.4

 
$
17.4

Effective tax rate
34.0
%
 
36.7
%
The effective tax rate was 34.0% in 2013 compared to 36.7% in 2012. The 2013 effective tax rate of 34.0% reflects a $0.9 million reduction in net state and local income taxes and a $0.3 million increase in foreign tax incentives. The 2012 effective tax rate reflects approximately $0.8 million of tax benefits from changes in unrecognized tax benefits.





24


Results of Operations: 2012 versus 2011
Net Sales:
 
(dollars in millions)
 
 
 
 
 
 
 
 
Segment
 
2012
 
2011
 
Change
 
% Change
Material Handling
 
$
286.0

 
$
261.8

 
$
24.2

 
9
 %
Lawn & Garden
 
205.8

 
217.1

 
(11.3
)
 
(5
)%
Distribution
 
176.6

 
183.7

 
(7.1
)
 
(4
)%
Engineered Products
 
141.7

 
116.2

 
25.5

 
22
 %
Intra-segment elimination
 
(18.9
)
 
(23.1
)
 
4.2

 
18
 %
TOTAL
 
$
791.2

 
$
755.7

 
$
35.5

 
5
 %
Net sales for 2012 were $791.2 million, an increase of $35.5 million or 5% compared to the prior year. Strong sales volumes of $18.6 million were driven by our Engineered Products and Material Handling segments, which more than offset declines in our Distribution and Lawn and Garden segments. In addition, $21.5 million in net sales were generated from the inclusion of our acquisitions in 2012 from the dates acquired. Net sales were negatively impacted in 2012 compared to 2011 as a result of $3.4 million in unfavorable foreign currency translation, primarily from the Brazilian real, as well as lower pricing of $1.2 million.
Net sales in the Material Handling Segment increased $24.2 million or 9% in 2012 compared to 2011. Current year net sales included $21.5 million in sales from our acquisitions of Novel on July 3, 2012 and Jamco on October 1, 2012. In addition, strong demand in the agricultural and industrial markets drove higher sales volumes of $6.6 million, including sales of new products. These net sales increases were offset by $2.7 million from the effect of unfavorable foreign currency translation and lower pricing of $1.2 million.
Net sales in the Lawn and Garden Segment in 2012 decreased $11.3 million or 5% compared to 2011. The decrease in net sales reflected lower volume of $9.5 million resulting from actions taken by our customers in 2012 such as inventory depletion and reduced production during the planting season. A shift in customer demand from the fourth quarter of 2012 into 2013 also contributed to the decline in net sales year-over-year. Net sales were also lower in 2012 compared to 2011 due to lower pricing of $1.2 million and approximately $0.6 million from the effect of unfavorable foreign currency translation.
Net sales in the Distribution Segment decreased $7.1 million or 4% in 2012 compared to 2011. The reduction in net sales was almost entirely due to lower sales volume, driven by a decline in the industry's replacement tire shipments and lower equipment sales, as a result of market softness in the first half of 2012.

In the Engineered Products Segment, net sales in 2012 increased $25.5 million or 22% compared to 2011. The increase in net sales was due to higher sales volumes of $24.2 million from strong demand in the automotive, recreational vehicle, marine and contract manufacturing markets. Higher selling prices of $1.3 million also contributed to the increase.
Cost of Sales & Gross Profit:
 
(dollars in millions)
 
 
 
 
Cost of Sales and Gross Profit
 
2012
 
2011
Cost of sales
 
$
575.9

 
$
557.4

Gross profit
 
$
215.3

 
$
198.3

Gross profit as a percentage of sales
 
27.2
%
 
26.2
%
Gross profit margin increased to 27.2% for 2012 compared to 26.2% in the prior year. Increased sales, productivity improvements, raw material substitutions and decreased manufacturing costs resulted in higher gross profit and gross profit margin year-over-year. Manufacturing efficiencies were attained from executing our operations excellence initiatives in our Lawn and Garden Segment that offset a portion of the margin lost due to lower sales and in our other segments, primarily the Material Handling Segment.




25


Selling, General and Administrative Expenses:
 
(dollars in millions)
 
 
 
 
 
 
 
 
SG&A Expenses
 
2012
 
2011
 
Change
 
% Change
SG&A expenses
 
$
163.4

 
$
158.6

 
$
4.8

 
3
%
SG&A expenses as a percentage of sales
 
20.7
%
 
21.0
%
 
 
 
 
SG&A expenses increased $4.8 million or 3% compared with 2011. Excluding the $4.8 million increase in SG&A expenses from the two acquisitions in 2012 as of the dates acquired, SG&A was flat year-over-year. SG&A expenses in 2012 included increased employee related costs, primarily medical of $2.2 million and $2.4 million of higher distribution and selling costs. These increases were offset by a reduction of approximately $3.0 million in bad debt expense, primarily due to the recovery in 2012 of a bad debt recorded in 2011. SG&A expense in 2012 also included restructuring and other related charges of $3.4 million for severance, consulting and lease obligation costs. SG&A expense in 2011 included restructuring charges of $2.7 million and charges of $1.9 million related to an environmental investigation and feasibility study at New Idria. In 2012 and 2011, gains of $1.1 million and $0.7 million, respectively, were realized from the sale of facilities and other assets. Shipping and handling costs, including freight, are primarily classified as SG&A expenses.
Impairment Charges:
In 2011, there were impairment charges of $1.2 million related to two closed manufacturing facilities and fixed asset impairment charges. There were no impairment charges in 2012.
Interest Expense:
 
(dollars in millions)
 
 
 
 
 
 
 
 
Net Interest Expense
 
2012
 
2011
 
Change
 
% Change
Net interest expense
 
$
4.5

 
$
4.7

 
$
(0.2
)
 
(4
)%
Outstanding borrowings
 
$
92.8

 
$
74.0

 
$
18.8

 
25
 %
Average borrowing rate
 
4.91
%
 
5.22
%
 
 
 
 
Net interest expense in 2012 was $4.5 million, a decrease of 4% compared to the prior year. Outstanding borrowings were $18.8 million higher in 2012 versus 2011, although the lower average borrowing rate from the mix of the debt outstanding resulted in a reduction of interest expense. The increase in outstanding debt from 2011 to 2012 was primarily to fund our acquisitions in the current year.
Income Taxes:
 
(dollars in millions)
2012
 
2011
Income before taxes
$
47.3

 
$
33.7

Income tax expense
$
17.4

 
$
9.2

Effective tax rate
36.7
%
 
27.3
%
The effective tax rate was 36.7% in 2012 compared to 27.3% in 2011. The 2012 effective tax rate of 36.7% reflects an increase in net state tax expense of $2.7 million. The 2011 effective tax rate reflects the Company’s reversal of approximately $4.9 million of previously unrecognized tax benefits, primarily related to the incurred loss on the sale of its European Material Handling business in 2007 and other tax adjustments, including provision to return adjustments resulting from changes in estimates.
Acquisitions

In October 2012, the Company acquired 100% of the stock of Jamco, an Illinois corporation for $15.2 million. The purchase price included a cash payment of $15.1 million, net of $0.1 million in cash acquired. Jamco is a leading designer and manufacturer of heavy-duty industrial steel carts and safety cabinets. The Company has made preliminary estimates of the valuation of assets and intangible assets of purchase price allocation. The business is included in the Material Handling Segment.




26


In July 2012, the Company acquired 100% of the stock of Novel, a Brazil-based designer and manufacturer of reusable plastic crates and containers used for closed-loop shipping and storage. Novel also produces a diverse range of plastic industrial safety products. The total purchase price was approximately $30.9 million, which includes a cash payment of $3.4 million, net of $0.6 million of cash acquired, assumed debt of approximately $26.0 million and contingent consideration of $0.9 million based on an earnout. The contingent consideration, which is recorded in Other Liabilities in the Consolidated Statements of Financial Position is dependent upon the results of Novel exceeding predefined earnings before interest, taxes, depreciation and amortization over the next four years. The business is included in the Material Handling Segment.
Financial Condition & Liquidity and Capital Resources
Cash provided by operating activities was $96.1 million for the year ended December 31, 2013 compared to $60.8 million in 2012. The increase of $35.3 million was primarily attributable to cash flows from improved working capital and higher non-cash charges in comparison with the prior year. Net income was $26.0 million in 2013 compared to $30.0 million in 2012. Non-cash charges including depreciation and amortization were $38.6 million in 2013 compared to non-cash charges of $39.5 million in 2012.
Cash provided by working capital was $33.1 million in 2013 compared to cash used of $8.4 million in 2012. In 2013, cash used for inventories was approximately $1.6 million compared to $2.8 million in 2012. In 2013, the use of funds for accounts receivable decreased to $0.7 million compared to the use of $2.0 million in 2012. In addition, as a result of timing of payments and vendor terms management, there was an increase of $36.3 million in cash provided by accounts payable and accrued expenses in 2013 compared to 2012.
Capital expenditures were approximately $30.0 million in 2013 compared to $27.0 million in 2012. Capital spending in 2013 was higher than the preceding year as investments were made for new manufacturing focused on growth and productivity improvements. In 2013, the Company purchased an equity interest in a non-consolidated subsidiary, included in the Distribution segment, for approximately $0.6 million. In 2012, the Company paid a combined total of $18.5 million in connection with the acquisitions of Novel and Jamco. In 2013 and 2012, the Company received approximately $0.9 million and $3.1 million, respectively, in cash proceeds from the sale of certain property, plant & equipment.
During 2013, the Company used cash of $8.1 million to purchase 531 thousand shares of its own stock under a share repurchase plan compared to $4.2 million to purchase 282 thousand shares of it own stock in 2012. In addition, the Company used cash to pay dividends of $9.1 million and $13.0 million for the years 2013 and 2012, respectively. Higher dividend payments in 2012 resulted from the accelerated fourth quarter dividend payment made in December 2012 to reduce the tax impact for our shareholders for 2013.
On December 13, 2013, the Company entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement”). The agreement provided for a $200 million senior revolving credit facility expiring on December 13, 2018, which replaced the existing $180 million facility. Amounts borrowed under the Loan Agreement were used to replace the amounts outstanding under the existing $180 million loan agreement, working capital and general corporate purposes, and the repayment of our $35 million of 6.81% Senior Unsecured Notes. Amounts borrowed under the agreement are secured by pledges of stock of certain of our foreign and domestic subsidiaries.
Borrowings under the Loan Agreement bear interest at the LIBOR rate, prime rate, federal funds effective rate, the Canadian deposit offered rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case plus the applicable margin as set forth in the Loan Agreement.
On October 22, 2013, the Company entered into a note purchase agreement for the private placement of Senior Unsecured Notes totaling $100 million with a group of investors. The four series of notes range in face value from $11 million to $40 million, with interest rates ranging from 4.67% to 5.45%, payable semiannually, and expiring between 2021 and 2026. At December 31, 2013, the Company had $11 million of its 5.25% Senior Unsecured Notes due January 15, 2024 outstanding under the note purchase agreement. Remaining proceeds of $89 million under the note purchase agreement were subsequently received in January 2014.
Total debt outstanding at December 31, 2013 was $44.3 million, net of deferred financing costs, compared with $92.8 million at December 31, 2012. The decrease in debt outstanding year-over-year is primarily due to the repayment of the $35 million Senior Unsecured Notes and net repayment on the credit facility during the year. The Company’s Loan Agreement provides available borrowing up to $200 million, reduced for letters of credit issued. As of December 31, 2013, the Company had $4.6 million of letters of credit issued related to insurance and other financing contracts in the ordinary course of business. As of December 31, 2013, there was $161.2 million available under our Loan Agreement.



27


As of December 31, 2013, the Company was in compliance with all its debt covenants. The most restrictive financial covenants for all of the Company’s debt are an interest coverage ratio, defined as earnings before interest and taxes divided by interest expense, and a leverage ratio, defined as earnings before interest, taxes, depreciation and amortization, as adjusted, compared to total debt. The ratios as of and for the period ended December 31, 2013 are shown in the following table:
  
Required Level
Actual Level
Interest Coverage Ratio
3.00 to 1 (minimum)
20.72
Leverage Ratio
3.25 to 1 (maximum)
0.53
The Company believes that cash flows from operations and available borrowing under its Loan Agreement will be sufficient to meet expected business requirements including capital expenditures, dividends, working capital, debt service and to fund the stock repurchase program into the foreseeable future.
On February 20, 2014, the Company's Board of Directors authorized $40 million of common stock repurchases to be completed in 2014.
Contractual Obligations

The following summarizes the Company’s estimated future cash outflows from financial contracts and commitments reflecting our current debt structure:
 
Less than
1 Year
 
2-3
Years
 
4-5
Years
 
Thereafter
 
Total
 
 
 
(Amounts in Thousands)
 
 
Principal payments on debt
$

 
$

 
$

 
$
100,000

 
$
100,000

Interest
5,552

 
11,345

 
11,320

 
22,147

 
50,364

Lease payments
9,421

 
14,101

 
7,402

 
13,317

 
44,241

Purchase commitments
666

 
61

 

 

 
727

Retirement obligations and other benefits
694

 
772

 
912

 
2,413

 
4,791

Total
$
16,333

 
$
26,279

 
$
19,634

 
$
137,877

 
$
200,123

 
Uncertain tax position liabilities are excluded from the contractual obligations table because a reasonably reliable estimate of the period of cash settlement with the respective tax authority cannot be made.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
Market Risk and Derivative Financial Instruments
The Company has certain financing arrangements that require interest payments based on floating interest rates. The Company’s financial results are subject to changes in the market rate of interest. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates. Accordingly, based on current debt levels at December 31, 2013, if market interest rates increase one percent, the Company’s interest expense would increase approximately $0.3 million annually.
Some of the Company’s subsidiaries operate in foreign countries and their financial results are subject to exchange rate movements. The Company has operations in Canada with foreign currency exposure, primarily due to sales made from businesses in Canada to customers in the United States ("U.S."). These sales are denominated in U.S. dollars. In addition, the Company’s subsidiary in Brazil has loans denominated in U.S. dollars. The Company has a systematic program to limit its exposure to fluctuations in exchange rates related to certain assets and liabilities of its operations in Canada and Brazil that are denominated in U.S. dollars. The net exposure generally ranges from $5 to $10 million. The foreign currency contracts and arrangements created under this program are not designated as hedged items under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging, and accordingly, the changes in the fair value of the foreign currency arrangements, which have been immaterial, are recorded in the income statement. The Company’s foreign currency arrangements are typically three months or less and are settled before the ending of a reporting period. At December 31, 2013, the Company had no foreign currency arrangements or contracts in place.



28


The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. The cost of operations can be affected as the market for these commodities changes. The Company currently has no derivative contracts to hedge this risk; however, the Company also has no significant purchase obligations to purchase fixed quantities of such commodities in future periods. Significant future increases in the cost of plastic resin or other adverse changes in the general economic environment could have a material adverse impact on the Company’s financial position, results of operations or cash flows.
Critical Accounting Policies
Our discussion and analysis of the Company’s financial condition and results of operations are based on the accompanying consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. As indicated in the Summary of Significant Accounting Policies included in the Notes to Consolidated Financial Statements (included in Item 8 of this report), the amount of assets, liabilities, revenue and expenses reported are affected by estimates and judgments that are necessary to comply with generally accepted accounting principles. We base our estimates on prior experience and other assumptions that we consider reasonable to our circumstances. We believe the following matters may involve a high degree of judgment and complexity.
Bad Debts — The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. Additionally, the Company also reviews historical trends for collectability in determining an estimate for its allowance for doubtful accounts. If economic circumstances change substantially, estimates of the recoverability of amounts due the Company could be reduced by a material amount.
Inventory — Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (“LIFO”) method for approximately 20 percent of the Company’s inventories and the first-in, first-out (“FIFO”) method for all other inventories. Where appropriate, standard cost systems are utilized and appropriate variances are evaluated for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs. Estimates of lower of cost or market value of inventory are determined based upon current economic conditions, historical sales quantities and patterns and, in some cases, the specific risk of loss on specifically identified inventories.
Goodwill — Goodwill is subjected to annual impairment testing, unless significant changes in circumstances indicate a potential impairment may have occurred sooner. We conduct our annual impairment assessment as of October 1. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we conclude that this is the case, we perform the two-step test. Otherwise, we do not perform the test.
Goodwill impairment testing requires, in part, that we estimate the fair value of our reporting units which, in turn, requires that we make judgments concerning future cash flows and appropriate discount rates for those reporting units. Fair values are established using comparative market multiples in the current market conditions and discounted cash flows. The discount rates used are based on the weighted average cost of capital determined for each of the Company’s reporting units and ranged from 9.3% to 12.3% in 2013. In addition we would make certain judgments about the selection of comparable companies used in determining market multiples in valuing our business units. We also compare our book value and the estimates of fair value of the reporting units to our market capitalization as of and at dates near the annual testing date. Management uses this comparison as additional evidence of the fair value of the Company, as our market capitalization may be suppressed by other factors such as the control premium associated with a controlling shareholder, our leverage or general expectations regarding future operating results and cash flows. In situations where the implied value of the Company under the Income or Market Approach are significantly different than our market capitalization we re-evaluate and adjust, if necessary, the assumptions underlying our Income and Market Approach models.
Contingencies — In the ordinary course of business, we are involved in various legal proceedings and contingencies. We have recorded liabilities for these matters in accordance with FASB ASC 450, Contingencies (“ASC 450”). ASC 450 requires a liability to be recorded based on our estimate of the probable cost of the resolution of a contingency. When management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the estimated loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable of occurrence than another. As additional information becomes available, any potential liability related to these matters will be assessed and the estimates will be revised, if necessary. The actual resolution of these contingencies may differ from our estimates. If a contingency were settled for an amount greater than our estimate, a future charge to income would result. Likewise, if a contingency were settled for an amount that is less than our estimate, a future credit to income would result.
Revenue Recognition — we recognize revenues from the sale of products, net of actual and estimated returns, at the point of passage of title and risk of loss, which is generally at time of shipment, and collectability of the fixed or determinable sales price is reasonably assured.

29


Income Taxes — Deferred income taxes are provided to recognize the effect of temporary differences between financial and tax reporting. Deferred income taxes are not provided for undistributed earnings of foreign consolidated subsidiaries as it is our intention to reinvest such earnings for an indefinite period of time. The Company has operations outside the U.S. and in jurisdictions with statutory tax rates lower than in the U.S. As a result, significant tax and treasury planning of future operations are necessary to determine the proper amounts of tax assets, liabilities and expense to be recognized. FASB ASC 740, Income Taxes ("ASC 740") requires that deferred tax assets be reduced by a valuation allowance, if based on all available evidence, it is more likely than not that the deferred tax asset will not be realized. The Company evaluates the recovery of its deferred tax assets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely heavily on estimates.
Also, significant judgment is required in determining the Company’s tax expense and in evaluating its tax positions, including evaluating uncertainties under ASC 740. We review our tax positions quarterly and adjust the balances as new information becomes available.
Recent Pronouncements
In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, requiring new disclosures regarding reclassification adjustments from accumulated other comprehensive income ("AOCI"). ASU No. 2013-02 requires disclosure of amounts reclassified out of AOCI in its entirety, by component, which the Company has elected to disclose in the note 1 to the enclosed consolidated financial statements. The Company adopted this guidance effective January 1, 2013.



30


ITEM 8.        Financial Statements and Supplementary Data
Summarized Quarterly Results of Operations
Thousands of Dollars, Except Per Share Data
Quarter Ended 2013
 
 
March-31
 
June-30
 
September-30
 
December-31
 
Total
Net Sales
 
 
$
214,980

 
$
204,024

 
$
194,920

 
$
211,286

 
$
825,210

Gross Profit
 
 
58,318

 
55,769

 
53,639

 
49,902

(1)
217,628

Net Income
 
 
7,883

 
8,312

 
6,488

 
3,319

(1)
26,002

Basic Per Share
(2)
 
$
0.24

 
$
0.25

 
$
0.19

 
$
0.10

(1)
$
0.77

Diluted Per Share
(2)
 
$
0.23

 
$
0.25

 
$
0.19

 
$
0.10

(1)
$
0.76

 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended 2012
 
 
March-31
 
June-30
 
September-30
 
December-31
 
Total
Net Sales
 
 
$
198,789

 
$
181,101

 
$
197,290

 
$
214,008

 
$
791,188

Gross Profit
 
 
57,998

 
47,364

 
52,729

 
57,190

 
215,281

Net Income
 
 
9,985

 
5,658

 
5,798

 
8,521

 
29,962

Basic Per Share
 
 
$
0.30

 
$
0.17

 
$
0.17

 
$
0.25

 
$
0.89

Diluted Per Share
 
 
$
0.29

 
$
0.17

 
$
0.17

 
$
0.25

 
$
0.88


(1) During the quarter ended December 31, 2013, the Company recorded approximately $9.4 million of restructuring and related charges primarily attributable to the Lawn and Garden Segment.

(2) The sum of the earnings per share for the four quarters in a year does not necessarily equal the total year earnings per share due to the computation of weighted shares outstanding during the period.





31


Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Myers Industries, Inc.
We have audited the accompanying consolidated statement of financial position of Myers Industries, Inc. and Subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Myers Industries, Inc. and Subsidiaries as of December 31, 2013 and 2012, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Myers Industries, Inc. and Subsidiaries' internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework), and our report dated March 11, 2014, expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Akron, Ohio
March 11, 2014



32


MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Years Ended December 31, 2013, 2012 and 2011
(Dollars in thousands, except share data)
 
 
2013
 
2012
 
2011
Net sales
$
825,210

 
$
791,188

 
$
755,654

Cost of sales
607,582

 
575,907

 
557,385

Gross profit
217,628

 
215,281

 
198,269

Selling expenses
91,739

 
85,519

 
81,475

General and administrative expenses
81,956

 
77,906

 
77,136

Impairment charges

 

 
1,249

 
173,695

 
163,425

 
159,860

Operating income
43,933

 
51,856

 
38,409

Interest
 
 
 
 
 
Income
(213
)
 
(164
)
 
(65
)
Expense
4,755

 
4,679

 
4,787

 
4,542

 
4,515

 
4,722

Income before income taxes
39,391

 
47,341

 
33,687

Income tax expense
13,389

 
17,379

 
9,182

Net income
$
26,002

 
$
29,962

 
$
24,505

Income per common share:
 
 
 
 
 
Basic
$
0.77

 
$
0.89

 
$
0.71

Diluted
$
0.76

 
$
0.88

 
$
0.71

Dividends declared per share
$
0.36

 
$
0.32

 
$
0.28


The accompanying notes are an integral part of these statements.


33


MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2013, 2012 and 2011
(Dollars in thousands, except share data)
 
 
 
2013
 
2012
 
2011
Net income
 
$
26,002

 
$
29,962

 
$
24,505

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
Foreign currency translation adjustment
 
(9,292
)
 
2,791

 
(2,240
)
Pension liability, net of tax of $605 in 2013, $80 in 2012 and $339 in 2011
 
1,076

 
558

 
(630
)
Total other comprehensive income (loss), net of tax
 
(8,216
)
 
3,349

 
(2,870
)
Comprehensive income
 
$
17,786

 
$
33,311

 
$
21,635


The accompanying notes are an integral part of these statements.




34



MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position
As of December 31, 2013 and 2012
(Dollars in thousands)
 
 
2013
 
2012
Assets
 
 
 
Current Assets
 
 
 
Cash
$
6,539

 
$
3,948

Accounts receivable-less allowances of $2,945 and $3,255, respectively
112,459

 
115,508

Inventories
 
 
 
Finished and in-process products
73,475

 
72,899

Raw materials and supplies
33,049

 
34,603

 
106,524

 
107,502

Prepaid expenses
7,174

 
9,033

Deferred income taxes
2,214

 
3,605

Total Current Assets
234,910

 
239,596

Other Assets
 
 
 
Goodwill
60,642

 
61,056

Patents and other intangible assets, net
21,115

 
25,839

Other
3,312

 
7,882

 
85,069

 
94,777

Property, Plant and Equipment, at Cost
 
 
 
Land
5,107

 
4,438

Buildings and leasehold improvements
67,620

 
57,058

Machinery and equipment
461,397

 
445,789

 
534,124

 
507,285

Less allowances for depreciation and amortization
(384,646
)
 
(356,802
)
Property, plant and equipment, net
149,478

 
150,483

Total Assets
$
469,457

 
$
484,856


The accompanying notes are an integral part of these statements.

35



MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position
As of December 31, 2013 and 2012
(Dollars in thousands, except share data)
 
 
2013
 
2012
Liabilities and Shareholders’ Equity
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
98,263

 
$
72,417

Accrued expenses
 
 
 
Employee compensation
22,950

 
18,885

Income taxes
6,529

 
1,090

Taxes, other than income taxes
2,751

 
2,606

Accrued interest
103

 
240

Other
19,987

 
19,239

Total Current Liabilities
150,583

 
114,477

Long-term debt
44,347

 
92,814

Other liabilities
14,687

 
17,865

Deferred income taxes
24,333

 
29,678

Shareholders’ Equity
 
 
 
Serial Preferred Shares (authorized 1,000,000 shares; none issued and outstanding)

 

Common Shares, without par value (authorized 60,000,000 shares; outstanding 33,572,778 and 33,480,189; net of treasury shares of 4,203,179 and 4,356,160, respectively)
20,313

 
20,316

Additional paid-in capital
266,276

 
266,419

Accumulated other comprehensive income
2,427

 
10,643

Retained deficit
(53,509
)
 
(67,356
)
Total Shareholders’ Equity
235,507

 
230,022

Total Liabilities and Shareholders’ Equity
$
469,457

 
$
484,856


The accompanying notes are an integral part of these statements.


36


MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
For the Years Ended December 31, 2013, 2012 and 2011
(Dollars in thousands, except share and per share data)
 
 
Common Shares
 
Additional
Paid-In
Capital
 
Accumulated Other
Comprehensive
Income
 
Retained
Deficit
 
 
Number
 
Amount
 
Balance at January 1, 2011
35,315,732

 
$
21,486

 
$
281,376

 
$
10,164

 
$
(101,221
)
 
Net income

 

 

 

 
24,505

 
Sales under option plans
59,031

 
36

 
597

 

 

 
Dividend reinvestment plan
11,610

 
7

 
111

 

 

 
Restricted stock and stock option grants, net
28,750

 

 
2,595

 

 

 
Foreign currency translation adjustment

 

 

 
(2,240
)
 

 
Purchases for treasury-net
(2,000,000
)
 
(1,220
)
 
(19,726
)
 

 

 
Stock contribution
5,365

 
3

 
47

 

 

 
Declared dividends - $.28 per share

 

 

 

 
(9,750
)
 
Pension liability, net of tax of $339

 

 

 
(630
)
 

 
Balance at December 31, 2011
33,420,488

 
$
20,312

 
$
265,000

 
$
7,294

 
$
(86,466
)
 
Net income

 

 

 

 
29,962

 
Net sales under option plans
278,659

 
145

 
2,870

 

 

 
Dividend reinvestment plan
7,112

 
5

 
102

 

 

 
Restricted stock vested
40,500

 
24

 
(24
)
 

 

 
Restricted stock and stock option grants, net
11,484

 

 
2,708

 

 

 
Cancellations and terminations of share grants

 

 
(253
)
 

 

 
Foreign currency translation adjustment

 

 

 
2,791

 

 
Purchases for treasury-net
(281,797
)
 
(172
)
 
(4,032
)
 

 

 
Stock contributions
3,743

 
2

 
48

 

 

 
Declared dividends - $.32 per share

 

 

 

 
(10,852
)
 
Pension liability, net of tax of $80

 

 

 
558

 

 
Balance at December 31, 2012
33,480,189

 
$
20,316

 
$
266,419

 
$
10,643

 
$
(67,356
)
 
Net income

 

 

 

 
26,002

 
Net sales under option plans
503,321

 
299

 
5,394

 

 

 
Dividend reinvestment plan
7,390

 
4

 
109

 

 

 
Restricted stock vested
112,000

 

 

 

 

 
Restricted stock and stock option grants, net
33,152

 

 
2,237

 

 

 
Tax benefit from options

 

 
389

 

 

 
Foreign currency translation adjustment

 

 

 
(9,292
)
 

 
Purchases for treasury-net
(530,983
)
 
(314
)
 
(7,782
)
 

 

 
Stock contributions
12,682

 
8

 
194

 

 

 
Shares withheld for employee taxes on equity awards
(44,973
)
 

 
(684
)
 

 

 
Declared dividends - $.36 per share

 

 

 

 
(12,155
)
 
Pension liability, net of tax of $605

 

 

 
1,076

 

 
Balance at December 31, 2013
33,572,778

 
$
20,313

 
$
266,276

 
$
2,427

 
$
(53,509
)
 

The accompanying notes are an integral part of these statements.

37


MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2013, 2012 and 2011
(Dollars in thousands)
 
2013
 
2012
 
2011
Cash Flows From Operating Activities